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Cognizant Technology Solutions posted a 20% drop in Q4 net profit to $316 million, compared to $395 million in the corresponding quarter last year. The US-based IT services company reported $4.18 billion revenue in the fourth quarter, down 2%, compared to the corresponding period. Its full-year revenue stood at $16.7 billion.

Cognizant follows the calendar year.

“We accomplished a great deal in the past year whilst keeping our clients and our talented associates foremost in mind,” said Cognizant CEO Brian Humphries.

“Having strengthened our portfolio, and anticipating the exit of a large financial services engagement, we enter 2021 reinvigorated by our growing commercial momentum, investments in our future, and our vision to become the preeminent technology services partner to clients globally,” he added.

Financial Services (31.2% of revenues) revenue decreased 11.1% year-over-year, or 11.4% in constant currency, driven by declines in both banking and insurance. Growth in regional banks and retail banking was offset by the anticipated exit from a customer engagement, which negatively impacted the company’s revenues in this segment by 730 basis points.

Cognizant made an offer in the fourth quarter to settle and exit a large customer engagement in the financial services segment in Continental Europe. The offer includes, among other terms, a proposed one-time payment and forgiveness of certain receivables. As a result of this offer, in the fourth quarter of 2020, the company recorded a reduction of revenue of $107 million and additional expenses of $33 million, primarily related to the impairment of long-lived assets.

Healthcare (30.3% of revenues) revenue grew 4.0% year-over-year, or 3.3% in constant currency, driven by growth in both healthcare and life sciences. Performance in healthcare improved, driven by strength in payer clients and software license sales. Within life sciences, strength in pharmaceutical clients was partially offset by weakness in medical device clients.

Products and Resources (22.7% of revenues) revenue decreased 1.6% year-over-year, or 2.4% in constant currency. The decline was driven by retail, consumer goods, travel and hospitality clients that were particularly adversely affected by the pandemic, partially offset by double-digit constant currency growth in manufacturing, logistics, energy and utilities.

The company’s quarterly dividend increased to $0.24 per share.

Communications, Media and Technology (15.8% of revenues) revenue increased 4.6% year-over-year, or 3.4% in constant currency, including a negative 790 basis point impact from the company’s exit of certain content-related services, driven by double-digit constant currency growth in both technology and communications and media, which benefited the IT company’s recent acquisitions.

“We made good progress on our transformation program, delivering on our cost optimization initiatives to fund our strategic growth priorities,” said Cognizant Chief Financial Officer Jan Siegmund.

“Another strong cash flow quarter supports our commitment to balanced capital allocation through an accelerated pace of acquisitions, continued share repurchases and today’s announced dividend increase,” he added.

The company expects its first quarter revenue to be $4.34-$4.38 billion, or growth of 2.8-3.8%. Full year 2021 revenue expected to be $17.6-$18.1 billion, or growth of 5.5-8.5%.

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